Nick D’Aloisio has officially earned his seat at the cool kids’ table. The 17-year-old high school student this week sold his news-aggregator app Summly to tech giant Yahoo for a reported $30 million in cash and stock. While he’s finishing up his diploma, he’ll also start work at Yahoo’s London office. Meanwhile, Yahoo plans to enhance its own mobile apps with the technology developed for Summly, which uses an algorithm to automatically produce easily digestible summaries of news stories.

The issue now isn’t what fancy car the teenager plans to buy with his millions. The real question is whether Summly, and now Yahoo, can take news stories from around the Web, present altered versions of them, and not run afoul of copyright law.

A court ruling last week in New York against a Norway-based news aggregator has brought the issue of copyright infringement in the media world back to the fore. The Associated Press sued and defeated Meltwater, a subscription-based media-monitoring service, for providing snippets of news stories to clients without licensing the content from AP. Meltwater argued that posting a headline, lead paragraph and one or two other relevant sentences of a story constituted fair use under copyright law and was not so different from what Google provides when a user types a query into its search bar. But U.S. District Judge Denise Cote did not agree, writing in her decision:

The news reporting and research upon which Meltwater relies was not done by Meltwater but by the AP; the copyrighted material that Meltwater has taken is the news reporting and research that AP labored to create … Permitting Meltwater to take the fruit of AP’s labor for its own profit, without compensating AP, injures AP’s ability to perform this essential function of democracy.

AP’s win marks a significant victory for media companies that feel they’ve lost control of their content in the digital age. News-industry heavyweights have tussled with aggregators before, but usually through threatening words or private settlements. In 2008 the Associated Press sued All Headline News, a now defunct website that was rewriting AP stories without attribution. The site ended up paying AP an undisclosed sum in a settlement. In 2009, Rupert Murdoch, owner of News Corp., said Google and Yahoo were stealing the news by aggregating it and profiting from it on their own websites. The New York Times Co. also settled in a 2008 case where a hyperlocal news site run by the Times-owned Boston Globe was sued for aggregating another local site’s links and headlines.

Now Meltwater could be on the hook for as much as $150,000 for each of the 33 articles for which they violated copyright law. Still, it’s not clear that AP or any other media company will have the ability — or the desire — to piggyback off this decision to target mobile news aggregators like Summly and Flipboard. “Fair use is a very fact-specific test,” says David Ardia, co-director of the University of North Carolina Center for Media Law and Policy. “Each of these decisions is a tree within a forest that is growing slowly, especially as technology changes.”

Meltwater mostly stands apart from everyday aggregators in its approach. The company charges its business clients thousands of dollars annually for access to its database of news snippets, a key difference from most services that Ardia says played heavily into the judge’s decision. Another difference: Summly doesn’t actually use the language of the articles it’s lifting from. Instead, a computer algorithm automatically rewrites and summarizes the pertinent points. By using fresh phrasing, the app skirts some copyright concerns. “If you take a story and you pull out the facts and you rewrite the story to contain those facts, what you are doing is not copyright infringement,” explains Andy Sellars, a staff attorney for the Digital Media Law Project housed at Harvard University. “When people complain about websites that are doing really sloppy rewrites of other people’s stories and posting them online … it’s not a copyright concern that they’re raising.”

Perhaps most critically, Meltwater wasn’t bringing AP much traffic. Meltwater links had a 0.08% click-through rate to AP websites, a number that the ruling judge thought was paltry. In the decision the judge reasoned that Meltwater was leveraging AP’s copyrighted material to act as a competitor instead of as a source driving traffic back to AP. But low click-through rates are common online, Sellars says. Using that as a basis for judgment “is not grounded in the reality of the Internet,” he says.

In evaluating digital platforms like Meltwater or Summly the courts seek to strike a balance between protecting technological innovation and quality journalism, two sectors that can provide a public good. The AP ruling hardly sets a definitive precedent, though, and is likely to be appealed later this year. Expect the fights between old and new media paradigms to continue — and to potentially reach more mainstream products.

“Good journalism is expensive and the Associated Press ought to be able to ensure that its members can continue to produce good, high-quality journalism,” Ardia says. “What we want to make sure, however, is that the law doesn’t enshrine a certain business model for doing so, where innovation can give us new ways of producing news. That’s a tension that gets worked out in these individual cases, but it’s one that society has great interest in seeing resolved.”